Lummi Tribe of Lummi Reservation, Washington v. United States

United States Court of Appeals

for the Federal Circuit

______________________

LUMMI TRIBE OF THE LUMMI RESERVATION,

WASHINGTON, LUMMI NATION HOUSING

AUTHORITY, HOPI TRIBAL HOUSING

AUTHORITY, FORT BERTHOLD HOUSING

AUTHORITY,

Plaintiffs-Appellees

FORT PECK HOUSING AUTHORITY,

Plaintiff

v.

UNITED STATES,

Defendant-Appellant

______________________

2016-2196

______________________

Appeal from the United States Court of Federal

Claims in No. 1:08-cv-00848-EGB, Senior Judge Eric G.

Bruggink.

______________________

Decided: September 12, 2017

______________________

JOHN FREDERICKS, III, Fredericks Peebles & Morgan,

LLP, Mandan, ND, argued for plaintiffs-appellees. Also

represented by JEFFREY S. RASMUSSEN, Louisville, CO.

2 LUMMI TRIBE v. UNITED STATES

STEVEN J. GILLINGHAM, Commercial Litigation

Branch, Civil Division, United States Department of

Justice, Washington, DC, argued for defendant-appellant.

Also represented by DAVID ALAN LEVITT, ROBERT E.

KIRSCHMAN, JR., BENJAMIN C. MIZER; GARY ALAN NEMEC,

DAVID A. SAHLI, PERRIN WRIGHT, United States Depart-

ment of Housing and Urban Development, Washington,

DC.

______________________

Before PROST, Chief Judge, O’MALLEY, and CHEN, Cir-

cuit Judges.

O’MALLEY, Circuit Judge.

The government seeks review of a September 30, 2015

order of the Court of Federal Claims (the “Claims Court”).

See Order, Lummi Tribe of the Lummi Reservation v.

United States, No. 08-848C (Fed. Cl. Sept. 30, 2015), ECF

No. 121. In that order, the Claims Court reaffirmed its

prior ruling that the Native American Housing Assistance

and Self-Determination Act of 1996 (“NAHASDA”) is

money mandating, giving the Claims Court jurisdiction

over appellees’ claims. Id. On June 9, 2016, this court

granted the government’s petition for interlocutory appeal

to “ensure that the Court of Federal Claims is the court of

proper jurisdiction before requiring it and the parties to

undergo extensive unnecessary proceedings.” Order at 3,

Lummi Tribe of the Lummi Reservation v. United States,

No. 2016-124 (Fed. Cir. June 9, 2016), ECF No. 1-2. For

the following reasons, we vacate and instruct the Claims

Court to dismiss this action for lack of subject-matter

jurisdiction.

BACKGROUND

Congress enacted NAHASDA, 25 U.S.C. §§ 4101–

4243, to fulfill the federal government’s responsibility to

Indian tribes and their members “to improve their hous-

ing conditions and socioeconomic status so that they are

LUMMI TRIBE v. UNITED STATES 3

able to take greater responsibility for their own economic

condition.” Id. § 4101(4). In particular, NAHASDA

established an annual block grant system, whereby

Indian tribes receive direct funding in order to provide

affordable housing to their members. The relevant sec-

tions of NAHASDA require HUD to make grants accord-

ing to a regulatory formula based on several factors,

including: (1) “[t]he number of low-income housing dwell-

ing units . . . owned or operated” by the tribes on

NAHASDA’s effective date; (2) the number of Indian

families and extent of poverty and economic distress

within a tribe’s area; and (3) “[o]ther objectively measura-

ble conditions as [HUD] and the Indian tribes may speci-

fy.” Id. § 4152(b)(1)–(3).

The dwelling units described in factor (1) are called

Formula Current Assisted Stock (“FCAS”). Each eligible

dwelling unit in a tribe’s FCAS is entitled to a sum cer-

tain amount of funding each year based upon a calculated

operating subsidy and modernization allocation. HUD

regulations establish which units initially count as FCAS

in the formula, and when those units no longer qualify

(e.g., when they have been or could have been conveyed to

homebuyers). 24 C.F.R. §§ 1000.312, 1000.314, 1000.318.

Once awarded these subsidies, grantee tribes are limited

in how and when they may dispense the funds, which can

be used only on statutorily specified activities in accord-

ance with program requirements. See, e.g., 25 U.S.C.

§ 4139; 2 C.F.R. § 200.313–314.

In the event of a grantee’s failure to comply substan-

tially with NAHASDA, HUD can recapture grant funds

by: “(A) terminat[ing] payments under this [Act] to the

recipient; (B) reduc[ing] payments [by the amount not

expended in compliance with the Act]; (C) limit[ing] the

availability of payments [to compliant activities]; or

(D) . . . provid[ing] a replacement tribally designated

housing entity for the recipient.” 25 U.S.C. § 4161(a)(1).

4 LUMMI TRIBE v. UNITED STATES

Appellees are an Indian tribe and three tribal housing

entities (collectively, “the Tribes”) who qualified for and

received NAHASDA block grants. Lummi Tribe of the

Lummi Reservation v. United States, 99 Fed. Cl. 584, 588

(2011) (“Lummi I”). In 2001, a HUD Inspector General

report concluded that, since the enactment of NAHASDA,

HUD had improperly allocated funds to the Tribes be-

cause the formula that HUD applied had included hous-

ing that did not qualify as FCAS. Id. HUD informed the

Tribes of the amount overfunded, the regulations on

which HUD based its decision, and the housing units that

HUD found ineligible. Id. at 599. HUD also provided the

Tribes with the opportunity to dispute HUD’s findings

regarding FCAS unit eligibility or appeal the determina-

tions of overfunding. Id. Thereafter, HUD eliminated the

ineligible units from the FCAS data and recouped the

excess funding by deducting the amount overfunded from

subsequent grant allocations—$863,236 from Lummi,

$249,689 from Fort Berthold, and $964,699 from Hopi.

Lummi Tribe of the Lummi Reservation v. United States,

106 Fed. Cl. 623, 625 (2011) (“Lummi II”).

The Tribes brought suit in the Claims Court under

the Tucker Act and the Indian Tucker Act, 28 U.S.C.

§§ 1491(a)(1) and 1505, respectively, alleging that HUD

improperly deprived them of grant funds to which they

were entitled. In relevant part, the Tribes alleged that:

(1) HUD misapplied the NAHASDA formula by inappro-

priately removing housing units from the FCAS data,

which led to decreased grant amounts; and (2) HUD was

obligated by 25 U.S.C. § 4165 to provide the Tribes with a

hearing during which they could respond to the HUD

report, but HUD failed to do so. Lummi I, 99 Fed. Cl. at

591; see generally 25 U.S.C. § 4165 (“The Secretary shall

provide each recipient that is the subject of a report made

by the Secretary . . . . notice that the recipient may review

and comment on the report during a period of not less

than 30 days . . . .”).

LUMMI TRIBE v. UNITED STATES 5

The government moved to dismiss the claims for lack

of jurisdiction, arguing in particular that NAHASDA’s

provision for block grants is not money mandating.

Lummi I, 99 Fed. Cl. at 591. The Claims Court disagreed,

noting that NAHASDA provides that the Secretary “shall

. . . make grants” and “shall allocate any amounts” among

Indian tribes that comply with certain requirements. Id.

at 594. The Claims Court concluded that “the Secretary

is thus bound by the statute to pay a qualifying tribe the

amount to which it is entitled under the formula,” mean-

ing that the statute “can fairly be interpreted as mandat-

ing the payment of compensation by the government.” Id.

(citing Greenlee Cty. v. United States, 487 F.3d 871, 877

(Fed. Cir. 2007)).

Initially, the Claims Court dismissed the Tribes’ pro-

cedural claims, finding that HUD had provided “full

notice of the government’s claims along with a meaningful

opportunity to respond.” Id. at 599. The Tribes moved for

reconsideration on this point and, on September 29, 2011,

the Claims Court vacated its decision. Lummi Tribe II,

106 Fed. Cl. 623, 624 n.1. The Tribes amended their

complaint, re-alleged that HUD had violated the proce-

dural requirements of NAHASDA, and argued for the first

time that those violations rendered the change in grant

funds an illegal exaction. Id. at 625.

The government thereafter filed another motion to

dismiss, arguing that HUD had complied with all relevant

NAHASDA provisions. Id. at 623–24. The Claims Court

disagreed, holding that “[p]roviding [the Tribes] with the

opportunity for a hearing in this case before adjusting

their grant amounts was . . . something HUD was re-

quired—but failed—to do.” Id. at 633. The issue of

whether HUD, on the merits, had properly determined

the Tribes’ FCAS units when applying NAHASDA formu-

lae was reserved for trial. See Lummi Tribe of the Lummi

Reservation v. United States, 112 Fed. Cl. 353, 355 n.2

(2013) (“Lummi III”).

6 LUMMI TRIBE v. UNITED STATES

The case was then transferred to Senior Judge Brug-

gink, who ordered supplemental briefing to address a

number of questions, including whether NAHASDA is

money mandating and whether NAHASDA’s status as

such affected the illegal exaction claim. See Order, Lum-

mi, No. 08-848C (Fed. Cl. Sept. 30, 2015), ECF No. 121.

The Claims Court reaffirmed its holding that NAHASDA

is money mandating, but held that “the failure to give a

hearing under § 4165 does not, on its own, support an

illegal exaction claim.” Id. at 5. The court explained that

“the substantive provisions of NAHASDA [are money

mandating], not its procedural elements,” and “nothing in

the statutory framework . . . suggests that the remedy for

failure to afford procedural rights is, without further proof

of entitlement, the payment of money.” Id.

Because the Claims Court’s finding that NAHASDA

itself is money mandating was therefore dispositive on the

issue of jurisdiction, the government sought and obtained

certification for interlocutory appeal. The Tribes, mean-

while, sought reconsideration of the Claims Court’s illegal

exaction holding, which the Claims Court denied. Order,

Lummi, No. 08-848C (Fed. Cl. Apr. 20, 2016), ECF No.

138; Order, Lummi, No. 2016-124 (Fed. Cir. June 9,

2016), ECF No. 1-2.

STANDARD OF REVIEW

“Subject matter jurisdiction is a question of law that

we review de novo.” Litecubes, LLC v. N. Light Prods.,

523 F.3d 1353, 1360 (Fed. Cir. 2008). In particular, we

“review[] without deference the trial court’s statutory

interpretation.” Samish Indian Nation v. United States,

419 F.3d 1355, 1364 (Fed. Cir. 2005). The “plaintiff bears

the burden of establishing subject-matter jurisdiction by a

preponderance of the evidence.” Hopi Tribe v. United

States, 782 F.3d 662, 666 (Fed. Cir. 2015).

LUMMI TRIBE v. UNITED STATES 7

DISCUSSION

The Tucker Act itself does not create a substantive

cause of action; in order to come within the jurisdictional

reach and the waiver of sovereign immunity in the Tucker

Act, a plaintiff must identify a separate source of substan-

tive law that creates the right to money damages. United

States v. Mitchell, 463 U.S. 206, 216 (1983); United States

v. Testan, 424 U.S. 392, 398 (1976). In the parlance of

Tucker Act cases, that source must be “money-

mandating.” See Mitchell, 463 U.S. at 217; Testan, 424

U.S. at 398. On appeal, the government makes a single

affirmative argument: the Claims Court erred in finding

NAHASDA to be a money-mandating statute, such that

the Claims Court is without jurisdiction over this case.

We agree.

A statute is money mandating if either: (1) “it can

fairly be interpreted as mandating compensation by the

Federal Government for . . . damages sustained”; or (2) “it

grants the claimant a right to recover damages either

expressly or by implication.” Blueport Co., LLC v. United

States, 533 F.3d 1374, 1383 (Fed. Cir. 2008) (quoting

Mitchell, 463 U.S. at 216–17 (internal quotation marks

omitted)). NAHASDA does neither, as revealed by the

ultimately equitable nature of the Tribe’s claims. We find

National Center for Manufacturing Sciences v. United

States, 114 F.3d 196 (Fed. Cir. 1997), instructive on this

point. The statute at issue in that case stated that “not

less than $40,000,000 of the funds appropriated in this

paragraph shall be made available only for the [plaintiff].”

Nat’l Ctr., 114 F.3d at 198 (quoting Pub. L. No. 103-139,

107 Stat. 1418, 1433 (1993)). The Air Force only released

$24,125,000, and so the plaintiff brought suit in district

court, seeking an order directing the Air Force to release

the remainder. On the Air Force’s motion, the district

court transferred the case to the Claims Court, a transfer

that this court reversed on appeal. Specifically, relying on

Bowen v. Massachusetts, 487 U.S. 879 (1988), this court

8 LUMMI TRIBE v. UNITED STATES

outlined “the kinds of statutory claims for which a Tucker

Act remedy is available”—and found the statute at issue

wanting:

Some portions of NCMS's complaint suggest that

NCMS seeks a “naked money judgment” for

$15,875,000 against the government. Other por-

tions of the complaint, however, make clear that

NCMS anticipates the need for injunctive relief,

such as an order enjoining the defendants from

obligating and disbursing particular funds that

should be reserved for NCMS, and “[e]xtending

the time of obligation” in the Appropriations Act

to preserve the status quo. Looking behind the

complaint, moreover, we conclude that it is doubt-

ful that a simple money judgment in NCMS’s fa-

vor would be appropriate, even if NCMS is correct

in its claim that it is entitled to have the remain-

ing $15,875,000 referred to in the Appropriations

Act allotted to its account.

The Appropriations Act directs that the appropri-

ated funds be used “[f]or expenses necessary for

basic and applied scientific research, develop-

ment, test and evaluation, including maintenance,

rehabilitation, lease, and operation of facilities

and equipment, as authorized by law.” Pub. L.

No. 103–139, 107 Stat. 1418, 1433 (1993). Thus,

as NCMS acknowledged at oral argument, it

would not be entitled to a monetary judgment that

would allow it to use the funds appropriated under

the Act for any purpose, without restriction. In-

stead, the Act requires that NCMS use any money

disbursed from the appropriated funds to perform

the basic and applied research functions called for

in the Act. The Act thus contemplates a coopera-

tive, ongoing relationship between NCMS and the

Air Force in the allocation and use of the funds.

LUMMI TRIBE v. UNITED STATES 9

Nat’l Ctr., 114 F.3d at 201 (emphases added). According-

ly, we determined that the district court was not “di-

vest[ed] . . . of the authority to conduct APA review in this

case,” because “the remedy provided by a Tucker Act suit

in the [Claims Court would] not serve as the ‘other ade-

quate remedy in a court.’” Id. at 202 (quoting 5 U.S.C.

§ 704); see generally 5 U.S.C. § 704 (“Agency action made

reviewable by statute and final agency action for which

there is no other adequate remedy in a court are subject to

judicial review.”) (emphasis added).

The Tribes correctly observe that National Center did

not explicitly hold that the Claims Court was without

jurisdiction to hear the plaintiff’s claim. Whether or not

that conclusion can be fairly implied from the reasoning

in National Center, the reasoning alone remains instruc-

tive. Under NAHASDA, the Tribes are not entitled to an

actual payment of money damages, in the strictest terms;

their only alleged harm is having been allocated too little

in grant funding. Thus, at best, the Tribes seek a nomi-

nally greater strings-attached disbursement. But any

monies so disbursed could still be later reduced or clawed

back. See 25 U.S.C. § 4161(a)(1). And any property

acquired with said monies would be “held in trust” by the

Tribes, “as trustee for the beneficiaries” of NAHASDA. 2

C.F.R. § 200.316; see generally 24 C.F.R. §§ 85.1, 1000.26.

The Tribes are even restricted with respect to the particu-

lar bidding and bond terms they may use for, say, housing

construction contracts. See 2 C.F.R. § 200.325; 24 C.F.R.

§ 1000.26.

To label the disbursement of funds so thoroughly

scrutinized and cabined as a remedy for “damages” would

strain the meaning of the term to its breaking point. As

National Center highlights, that relief is equitable—and

thus not within the Claims Court’s purview. “Although

the Tucker Act has been amended to permit the [Claims

Court] to grant equitable relief ancillary to claims for

monetary relief,” there must be an underlying claim for

10 LUMMI TRIBE v. UNITED STATES

“‘actual, presently due money damages from the United

States.’” Nat’l Air Traffic Controllers Ass’n v. United

States, 160 F.3d 714, 716 (Fed. Cir. 1998) (quoting United

States v. King, 395 U.S. 1, 3 (1969)) (emphasis added). “It

is not enough that the court’s decision . . . will ultimately

enable the plaintiff to receive money from the govern-

ment.” Id. at 716; see generally Katz v. Cisneros, 16 F.3d

1204, 1208–09 (Fed. Cir. 1994) (“Hollywood Associates

seeks payments to which it alleges it is entitled pursuant

to federal statute and regulations; it does not seek money

as compensation for a loss suffered. . . . That a payment of

money may flow from a decision that HUD has erroneous-

ly interpreted or applied its regulation does not change

the nature of the case.”).

Here, the underlying claim is not for presently due

money damages. It is for larger strings-attached

NAHASDA grants—including subsequent supervision and

adjustment—and, hence, for equitable relief. Indeed, any

such claim for relief under NAHASDA would necessarily

be styled in the same fashion; the statute does not author-

ize a free and clear transfer of money. Accordingly, the

Claims Court erred in finding NAHASDA to be money

mandating.

The Tribes contend, in the alternative, that alleged

procedural failures associated with HUD’s grant decision

resulted in a per se illegal exaction, independently confer-

ring jurisdiction on the Claims Court. We disagree. An

illegal exaction claim must be based on property taken

from the claimant, not property left unawarded to the

claimant, rendering the Tribes’ exaction claim invalid on

its face. “An ‘illegal exaction’ . . . involves money that was

‘improperly paid, exacted, or taken from the claimant in

contravention of the Constitution, a statute, or a regula-

tion.’” Norman v. United States, 429 F.3d 1081, 1095

(Fed. Cir. 2005) (quoting Eastport S.S. Corp. v. United

States, 372 F.2d 1002, 1007 (Ct. Cl. 1967)) (emphasis

added). The Tribes have not and cannot provide legal

LUMMI TRIBE v. UNITED STATES 11

support for the notion that the failure to disburse proper-

ty that was never in the claimant’s possession or control

constitutes an exaction. Accordingly, we reject their

illegal exaction claim as an alternative basis for the

Claims Court’s jurisdiction.

Although we adopt the government’s position, we

have severe misgivings about the incongruency of its

stances in this and related litigation. In particular, it

appears that the government has taken, essentially, the

opposite position in at least one of our sister circuits in

parallel litigation. See Modoc Lassen Indian Hous. Auth.

v. United States Dep’t of Hous. and Urban Dev., 864 F.3d

1212, 2017 WL 3140877 (10th Cir. July 25, 2017). In

Modoc, an appeal from a federal district court action that

was brought pursuant to NAHASDA, the government

argued that “the district court nevertheless erred in

ordering HUD to return the alleged [NAHASDA] over-

payments to the Tribes because . . . such an order

amounts to an award of ‘money damages’ and therefore

runs afoul of 5 U.S.C. § 702.” Id. at *2. “[S]ection 702 . . .

waives sovereign immunity for non-monetary claims

against federal agencies,” Delano Farms Co. v. California

Table Grape Comm’n, 655 F.3d 1337, 1344 (Fed. Cir.

2011) (emphasis added), whereas the Tucker Act is the

appropriate vehicle for pursuing “the right to money

damages.” Fisher v. United States, 402 F.3d 1167, 1172

(Fed. Cir. 2005) (emphasis added). Two of the Tenth

Circuit’s three opinions found the government’s argument

persuasive, holding that § 702 was not the correct vehicle

for the Tribes’ claims. Modoc, 2017 WL 3140877, at *10. 1

1 Because Modoc was an appeal from a federal dis-

trict court action, the Tenth Circuit had no occasion to

consider the Tucker Act’s jurisdictional requirement that

12 LUMMI TRIBE v. UNITED STATES

At oral argument before this court, the government

appeared to even confirm that there is some tension in the

positions that it has taken. Oral Argument at 13:34–41,

available at http://oralarguments.cafc.uscourts.gov/default

.aspx?fl=2016-2196.mp3 (stating that, if this case were

transferred from the Claims Court, “the [district] court

could entertain [the claims], but in the end it would be

able to grant no remedy, and that’s what we’re saying in

the Tenth Circuit”). And yet, without irony, the govern-

ment accuses the Tribes of adopting an unfair “gotcha”

strategy in this litigation. Appellant Br. 42. Of the

government’s two faces, we find the one presented to the

Claims Court—the one arguing that this “is not a suit for

Tucker Act damages”—to be the correct one. Id. at 16.

CONCLUSION

For the foregoing reasons, the Claims Court’s order is

vacated, and we instruct the Claims Court to dismiss this

action for lack of subject-matter jurisdiction.

VACATED AND DISMISSED

a plaintiff identify a separate source of substantive law

that is “money-mandating.”